High earners are often looking for ways to strategically save on taxes while boosting their financial outlook. Health savings accounts (HSAs) are a great option for accomplishing this because they provide an uncommon three-point tax benefit: contributions reduce your taxable income, investments within the account grow tax-free, and, as long as you spend the funds on qualified medical expenses, the withdrawals are tax-free too. Additionally, HSAs have fewer restrictions and more benefits than flexible savings accounts (FSAs).
How to Prepare for Healthcare Costs in Retirement
Healthcare is one of the biggest and most unpredictable line items to prepare for in retirement. Medicare kicks in when you turn 65 however there is a big gap in what Medicare covers vs. the coverage you’re used to from your employer’s group plan.
For a couple retiring in 2015, Fidelity Investments reports that they will need to have an additional $245,000 in savings to cover their healthcare costs in retirement.
